Home rentals

Home rentals rise as buyers sit on the sidelines


Real estate agent Marisa Bowe often helps families moving to Houston find homes to rent while they get to know the city and decide where they would like to buy.

“But it’s funny,” she said of her current clients, “it’s more people who moved last year, filled their one-year leases, but still aren’t all of them. quite ready to buy. “

Bowe’s experience is not unique. The number of Houston families choosing to rent over single-family homes increased last month, according to data from the Houston Association of Realtors. While year-over-year home sales have declined or remained stable over the past three months, single-detached home rentals were up 27% in February from a year earlier.

“This suggests that many consumers choose to rent until they find the right home at the right price at the right interest rate to buy,” said Shannon Cobb Evans, president of the Houston Association of Realtors, in a statement. Press release.

Ken H. Johnson, real estate economist at Florida Atlantic University, put it more bluntly.

Home sales in February 2019 compared to the previous year:

Less than $ 100,000: decrease of 21.8%

$ 100,000 to $ 149,999: decrease of 16.0%

$ 150,000 to $ 249,999: 3.7% increase

$ 250,000 to $ 499,999: 5.5 percent increase

$ 500,000 to $ 749,999: 7.5% increase

$ 750,000 and over: decrease of 8.9%

Rentals in February 2019 compared to the previous year:

Single-family home rentals: 26.5% increase

Row house and condominium rentals: 27.1% increase

“It’s very much in line with what you would expect to see when house prices are too high,” he said. “There are only three markets whose prices are mostly overvalued in the country. Unfortunately, Houston is one of them. Denver and Dallas are the others, he said.

Johnson is one of the creators of Beracha, Hardin & Johnson Purchase and Rent Index, which compares the return on buying a home to renting a home of similar quality and investing the down payment in stocks and bonds. Index figures released this week suggest Houston is exerting one of the strongest downward pressures on homeownership demand in the country.

One of the main reasons, Johnson said, was that house prices in Houston rose faster than 40 years of historical data suggests they should have. At the end of 2018, the Houston Federal Housing Finance Agency’s Housing Price Index score was 23% above the historic market trend line.

“It will come back to average,” he said. “You are just starting to see this market turn. “

Frank Nothaft, chief economist at property analysis firm CoreLogic, also argued that, for this winter at least, renting makes more sense than buying for many people.

According to data from CoreLogic, monthly rental fees were 1% higher in December than the previous year. The average monthly mortgage payment, taking into account both higher home values ​​and soaring mortgage interest rates, rose 11% in December from a year earlier.

“It just put a damper on buying a home,” Nothaft said. “I think a lot of people said, ‘Wow. This is more than I can afford at the moment. Let me see what will happen in the next few months.

The good news is that since November, mortgage rates have fallen back to their level 12 months ago. “In my mind, this bodes very well for the home buying season,” Northaft said.

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